Clean Political Funding : Details of electoral bond scheme announced

In New Delhi , a bid to clean election financing , the government on Tuesday outlined contours of the
new Electoral Bonds that donors can buy from SBI and said receiving political parties can encase only
through a designated bank account.

 The electoral bonds with a life of 15 days can be encased only through a designated
bank account of the receiver
 Bonds will be available for the purchase for 10 days each in the months of January,
April , July and October.

In a bid to curb influence of illicit cash in Indian political system, the Finance Ministry today notified
the contours of new electoral bonds. Announced during the last Budget session, these bonds will now
be the only way to make donations to political parties.
Donors will be able to purchase these bonds through specified branches of the State Bank of India.
The bonds will be available for purchase for a period of 10 days in the months of January, April, July,
and October. This period will be extended to 30 days in the year general elections are to be held.
The bonds, which would be valid for 15 days, will not carry the donor’s name even though the
purchaser would have to fulfil KYC norms at the bank, finance minister Arun Jaitley said in the Lok
Sabha while announcing the contours of the scheme.

He had first announced the idea of electoral bonds in his Budget 2017-18 speech made on February 1,
2017, to make political funding more transparent.

The government has now finalized the scheme of electoral bonds. The scheme will be notified
today; he said.
Although called a bond, the banking instruments resembling promissory note will not carry any
interest. The lender will remain the custodian of the donor& funds until the political parties are paid.

The move is aimed at making political funding more transparent. Currently, almost all of the funding
is done by anonymous cash donations. This step follows the audacious move to ban high currency
notes in November 2016 in a bid to flush the system of black money.
Electoral bonds will allow donors to pay political parties using banks as an intermediary.

When Congress leader Mallikarjun Kharge asked what purpose the bonds would serve when the name
of the donor is not disclosed, Jaitley said bonds would get reflected in the balance sheet of the donors.

 

Let me clear misconceptions, if any. I had announced in Budget speech that political funding needs

to be cleansed up. A very large part of donation coming to political parties by the donors, quantum
and source is not known Electoral Bonds substantially cleanse the system," he said.

 

Government notifies electoral bonds for political donations.

On the notification of electoral bonds, Finance Minister Arun Jaitley said that only a citizen of India
or a body incorporated in India will be eligible to purchase the bond. Although no limit has been
imposed on the value of bonds that can be bought, donors will have to purchase them in multiples of
Rs 1,000, Rs 10,0000, Rs 1 lakh, Rs 10 lakh or Rs 1 crore, he said in statement in the Lok Sabha.
Although called a bond, they will be interest-free debt instruments that resemble promissory notes
where the SBI will be the custodian of the donor’s funds until the political parties are paid.
The electoral bonds will have to be encashed within 15 days or their issuance through a designated
bank account of the receiver. Also, The donations through electoral bonds could only go to registered
political parties.
Jaitley also clarified that the name of the payee will not appear on the bearer instrument, the amount
being paid has to be declared though. The donors will have to make KYC disclosures to SBI.

 

BY:

Shristi Rupam

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